The Japanese are in fact the world’s largest consumers of rare-earth minerals. But they have been stockpiling the minerals—and working on technologies to recycle them—to protect against supply disruptions. Toyota, which depends on these minerals in the batteries for its hybrids, reportedly possesses a one-year supply.

The United States, however, has not been so careful, letting the Chinese using predatory pricing to make American mines uncompetitive. As a result, there is almost no domestic production of rare earths in the United States. So Beijing’s cut off of the minerals to Japan highlights America’s critical vulnerability. Due to this almost-complete dependence on foreign sources, Molycorp is now looking to reopen its Mountain Pass mine in California and there is growing pressure on Congress to authorize the much-needed stockpiling of strategic minerals.

Yet there is a far more important lesson to be learned here. The West had assumed that China could be integrated into the global system of commerce and, once so enmeshed, it would become benign. Yet nine years after the accession to the World Trade Organization, Beijing appears not to have been constrained by its participation in global trade.

During this period, China has become economically powerful, and now, it is using that power to achieve geopolitical goals—in this case to demand from Japan territory over which it has exceedingly weak legal claims. So whatever we may think about free trade or open borders, we have to remember that every economic advantage we extend to China gives its leaders one more tool to advance their geopolitical goals.

“Taking into account the impact on our citizens and Japan-China relations, our judgment was that it would have been excessive to prolong the investigation and his detention,” said Toru Suzuki, deputy public prosecutor at a press conference today. Until now, Japanese authorities had insisted that the prosecutor would make a decision based only on the facts of Captain Zhan Qixiong’s conduct.

Beijing has—once again—learned intimidation works. Who will be its next target?

Japan has been deemed overwhelmingly the loser in the strange game of chicken that’s been escalating between Beijing and Tokyo over the past week — at least judging from a sampling of the immediate vitriolic reaction toward Tokyo in the virtual world.

In the seconds after Japan announced it would release the Chinese ship captain who has been in Japanese custody, Tokyo’s decision was lambasted as weak and the ruling Democratic Party of Japan as unable to govern.

“This nation really does not have foreign policy and has no ability…it’s a shame that [Japan] easily gave up their last cards. They [Chinese] are shaking us up badly,” moaned one person on Twitter. Another said more simply: “How do you say ‘cave’ in Chinese?” Yet another tweeted: “Due to the DPJ, democracy and the notion of a nation’s sovereignty are about to be lost. I’m amazed to see their inability to govern. They’re worse than the LDP which was in power before.”

Ever gentlemanly, an official from the Osaka prosecutors’ office said at a hastily called press conference Friday afternoon: “We decided it was inappropriate to continue the investigation while keeping the suspect in custody any further, considering the future of the Japan-China relationship,”

The government’s decision may be good for tourism and business ties between the two countries, but the jury’s still out on how it might knock the DPJ’s popularity rankings — and Prime Minister Naoto Kan’s.

Beginning with the Japanese scene, this event is guaranteed to fuel the rage of the right, which will become even more intense in denouncing the "treason" of the DPJ.

Moreover, these angry sentiments are unlikely to be confined to the usual suspects, because many ordinary Japanese too will be left with a sour taste in their mouths over the government's handling of this matter. Many will feel that releasing the captain and citing the future of "Japan-China relations" smacks of pathetic weakness.

It certainly doesn't help that Prime Minister Naoto Kan and Foreign Minister Seiji Maehara have been overseas at this critical juncture, and so are unavailable to provide leadership or any convincing public explanations.

It would not be surprising if the next public opinion polls show a significant drop in support for the cabinet.

In fairness, the DPJ inherited a political posture from their predecessors which argued that "no territorial issues exist" in regard to the Senkaku Islands. With this as their starting point, Tokyo was poorly prepared to respond to Chinese (and Taiwanese) demands.

While the United States hasn't taken an official position on the claims to the islands, they are considered part of Japan based on U.S.-Japan security treaties.

Defense Secretary Robert Gates told reporters Thursday the United States "would fulfill our alliance responsibility" if the conflict escalated.

Though analysts don't think the current tension will escalate and draw in the U.S. military treaty obligations, the agreements add murkiness to an already muddy territorial dispute.

It also puts the United States in the uncomfortable position of trying to stand by its closest ally in the region, Japan, while not irritating China, a growing power that the U.S. needs for a variety of political and economic issues.

"We're watching that tension very, very carefully," Navy Adm. Mike Mullen, chairman of the Joint Chiefs of Staff told reporters at the Pentagon ."Obviously we're very, very strongly in support of our ally in that region, Japan.

Both China and Japan have raised the issue with Secretary of State Hillary Clinton during meetings on the sidelines of the United Nations General Assembly. On Thursday, during talks with Japanese Foreign Minister Seiji Maehara, Clinton urged Japan to resolve the dispute through dialogue, State Department Spokesman P.J. Crowley said.

The decision to release the captain of a Chinese fishing boat involved in a collision with Japan Coast Guard patrols boats was a political decision made by the Japanese government and not by the Naha District Public Prosecutors Office, as it has been publicly announced, according sources close to Prime Minister Naoto Kan.

In support of GM's analysis "My money says Japan folded after the US told them that we don't have their back" while flying back to LA from Dulles/DC airport today this morning's Pravda on the Potomac (a.k.a. the WaPo) quoted some Under Secretary of State saying that Japan had done the right thing, that is was the sort of thing that "mature" nations did or something like that.

QUESTION: P.J., EAP in Washington is telling us to ask you for any statement on the release of the Chinese captain by the Japanese. They keep deferring us back up here to you. They say, “P.J. will have something to say on it.”

MR. CROWLEY: Well, as we had stated yesterday, we were concerned that this was an issue that had the potential to escalate. I think Jeff Bader yesterday talked about the strong nationalist fervor that had been generated both on the Chinese side and the Japanese side, so we are gratified that the situation has been resolved. It was something that the Japanese Government assured us that would be done within accordance of their legal process and international law. This was a Japanese decision to make, and we’re just hopeful that with the release of the ship captain, tensions will recede and the countries in the region will get back to normal business.

QUESTION: Thank you.

QUESTION: Just one Japanese question. Is this – I mean, maybe that Prime Minister Kan’s – his new cabinet is criticized by the other side, opposite side of the party – I mean the – this compromise means that Japan lost diplomatic – diplomatically with the Chinese – I mean this kind of chicken game, people (inaudible) chicken game. Don’t you think that this kind of criticizing (inaudible)?

MR. CROWLEY: I mean, as we – we think this is a proper outcome. And we had discussed this with the Japanese. It came up, as we said, in the meeting that the Secretary had with Foreign Minister Maehara yesterday. We had some low-level – lower-level conversations with the Chinese as well, and we sensed that there was a desire on both sides to resolve this soon. We think this is the right decision. It’s how mature states resolve these things through diplomacy . And we think this is in the interest of the two countries and the interest of the region. Obviously, there are some underlying issues that have been triggered by this episode. The United States continues to support freedom of navigation in the region, and we will continue to emphasize that. Obviously, we have an important meeting that’ll be going on today involving the ASEAN countries and you’ll be seeing a communiqué that comes out of that meeting.

QUESTION: Regarding to the Clinton and Maehara discussion, was there any indication from the Japanese side of this possibility to release him?

MR. CROWLEY: This is a decision for – that Japan has made, and I’ll defer to the Japanese Government to explain its reasoning. But obviously, we believe that this will significantly reduce the existing tension. We think it was a proper decision for Japan to make.

The sudden Friday release also touched off an unusually intense political firestorm in Japan, with the media and opposition politicians hammering Prime Minister Naoto Kan's government for handling the incident in a way that seemed to portray Japan as weak and succumbing to pressure from China.

The Chinese government demanded on Saturday that Japan apologize for the incident, suggesting that China's steady intensifying actions against Japan over the past two-and-a-half weeks—from curbing diplomatic exchanges to scaling back commercial activity—may not abate. "China of course has the right to demand Japan apologize and make compensation,'' Foreign Ministry spokeswoman Jiang Yu said in a Chinese-language statement.

Japan's foreign ministry issued its own sternly worded statement rejecting the plea. "The demand by the Chinese side for apology and compensation is completely groundless and is utterly unacceptable for Japan," that statement said.

*snip*

Japanese government officials, including Mr. Kan, denied any political influence on the prosecutors' decision, but local media said there was no doubt that the issue was settled in a political decision with national-government input.

"To begin with, prosecutors are not authorized to determine what kind of 'future Japan-China ties' is desirable," the Nikkei Shimbun, Japan's leading business daily, said. The Mainichi Shimbun shared this view in its editorial, saying it was "odd" for the prosecutors to refer to "diplomatic considerations" in releasing the captain and that it contradicted the government stance that the issue would be handled in accordance with the law.

Meanwhile, the Asahi Shimbun said, "It must be a high-level political judgment by the Kan administration." The paper's editorial also said, "In the first place, did the Kan government forecast the possible reaction of China and how to conclude the issue when it decided to arrest the captain?"

"It cannot be helped if the weakness of the DPJ's diplomacy is pointed out," it said. "It should reflect on it seriously as a bitter lesson."

The Japanese papers' criticism was echoed by opposition-party members on NHK, the public broadcaster. "What message did Tokyo send to other Asian nations which have territorial disputes [with China]?" said Nobuteru Ishihara, secretary-general of the Liberal Democratic Party, the largest opposition bloc. He added that the decision would also confuse Japan's coastguards who are out in the sea on duty. "What should they do if China again illegally enters our territorial waters?"

BEIJING, Sept. 26 (Xinhua) -- China's regulation of its rare-earth minerals industry protects the environment, prevents over exploitation of the its resource, and promotes the development of new energy industries across the globe, experts say.

Rare earths have become increasingly important in the manufacture of new energy products like electric-car batteries, wind turbines and other sophisticated products including flat-screen monitors, missiles and aerospace alloys.

The exhaustion of China's rare earths would be a major blow to the world's green energy industry, so China must regulate to curb excessive and disorderly mining of the non-renewable resource, the latest edition of the Xinhua News Agency's finance magazine - Economy & Nation Weekly - quoted Lin Donglu, secretary general of the Chinese Society of Rare Earths, as saying Sunday.

China's regulation of its rare earth industry includes reducing export quotas, cracking down on illegal mining and smuggling, no further issuing of mining licenses and the imposing of production caps.

The time is right to form an international competition mechanism for the rare earth industry to ensure sustainable development of new energy technologies, Lin said, noting that China's rare earth reserves accounted for one third of the world's total in 2009.

However, China's rare earths output hit 120,000 tonnes last year, 97 percent of the world's total, according to a report by Marc Humphries, an energy policy analyst at the United States Congressional Research Service.

Whereas an island nation such as Britain goes to sea as a matter of course, a continental nation with long and contentious land borders, such as China, goes to sea as a luxury. The last time China went to sea in the manner that it is doing was in the early 15th century, when the Ming Dynasty explorer Zheng He sailed his fleets as far as the Horn of Africa. His journeys around the southern Eurasian rim ended when the Ming emperors became distracted by their land campaigns against the Mongols to the north. Despite occasional unrest among the Muslim Uighur Turks in western China, history is not likely to repeat itself. If anything, the forces of Chinese demography and corporate control are extending Chinese power beyond the country's dry-land frontiers -- into Russia, Mongolia and Central Asia.

China has the world's second-largest naval service, after only the United States. Rather than purchase warships across the board, it is developing niche capacities in sub-surface warfare and missile technology designed to hit moving targets at sea. At some point, the U.S. Navy is likely to be denied unimpeded access to the waters off East Asia. China's 66 submarines constitute roughly twice as many warships as the entire British Royal Navy. If China expands its submarine fleet to 78 by 2020 as planned, it would be on par with the U.S. Navy's undersea fleet in quantity, if not in quality. If our economy remains wobbly while China's continues to rise -- China's defense budget is growing nearly 10 percent annually -- this will have repercussions for each nation's sea power. And with 90 percent of commercial goods worldwide still transported by ship, sea control is critical.ad_icon

The geographical heart of America's hard-power competition with China will be the South China Sea, through which passes a third of all commercial maritime traffic worldwide and half of the hydrocarbons destined for Japan, the Korean Peninsula and northeastern China. That sea grants Beijing access to the Indian Ocean via the Strait of Malacca, and thus to the entire arc of Islam, from East Africa to Southeast Asia. The United States and others consider the South China Sea an international waterway; China considers it a "core interest." Much like when the Panama Canal was being dug, and the United States sought domination of the Caribbean to be the preeminent power in the Western Hemisphere, China seeks domination of the South China Sea to be the dominant power in much of the Eastern Hemisphere.

We underestimate the importance of what is occurring between China and Taiwan, at the northern end of the South China Sea. With 270 flights per week between the countries, and hundreds of missiles on the mainland targeting the island, China is quietly incorporating Taiwan into its dominion. Once it becomes clear, a few years or a decade hence, that the United States cannot credibly defend Taiwan, China will be able to redirect its naval energies beyond the first island chain in the Pacific (from Japan south to Australia) to the second island chain (Guam and the Northern Mariana Islands) and in the opposite direction, to the Indian Ocean.

Stratfor's George Friedman's book "The Next 100 Years" (which the author of this article may have read ) really impressed me with the importance of naval power. This article's analysis makes a lot of sense to me.

Anyone here still think Obama didn't tell Japan that the US wouldn't back them? Anyone here think China won't continue to press their claim on the islands?

"Wouldn't back them" means what? On this issue? As the State Department Official said, "I mean, as we – we think this is a proper outcome."

So? I too think this was the proper outcome; Japan handled it poorly.Why do we want to enter into this matter? Or approve or back one party in an economic war over an island in dispute.China had already begun to escalate.

Further, Japan didn't capitulate because we agreed or didn't agree with them or told them we "wouldn't back them".The issue is economics. At this time, Japan needs China and it's market a lot more than China needs Japan. Large Keiretsu, the tradingcompanies, and the Japan Business Association needs China. Therefore so does Japan. Mix this with the historyand you have problems.

Sure China will continue to press their claim on the islands. Taiwan toois pressing a claim. Russia and Japan are also disputing some islands. It happens.

**That despite our treaty obligations, we would not provide military support to Japan in a conflict with China over the disputed islands.**

So? I too think this was the proper outcome; Japan handled it poorly.

**Really? You think that the islands that have been recognized as belonging to Japan by us since WWII should be conquered by China because China is willing to assert their ownership?Should Japan police the lands in it's jurisdiction and arrest violators of it's laws or not?**

In the newest issue of Joint Force Quarterly, a professional military journal published by National Defense University, Navy Reserve Lt. Cdr. Cindy Hurst, a research analyst in the Foreign Military Studies Office at Fort Leavenworth, Kan., wrote that "China appears to be holding an unlikely trump card" through its dominance in the rare-earth element industry.

"The country's grasp on the rare-earth element industry could one day give China a strong technological advantage and increase its military superiority," she wrote.

The Department of Defense is completing a study to identify the potential national security risks of rare-earth material dependency. Pentagon spokeswoman Cheryl Irwin said a full report drawing on input from a number of government agencies will be released next month.

"It is a highly charged topic," she said, adding the Pentagon is seeking to separate "fact from fiction to ensure we continue to protect the interests of both the warfighter and the taxpayer."

In parallel, U.S. lawmakers have begun probing the national-security implications of rare-earth supplies. The House Committee on Science and Technology's investigations panel held a hearing this year on the issue, and on Thursday, the committee began marking up a bill that would encourage the U.S. government to hedge against rare-earth shortages by collecting more data on potential supply and identifying alternative materials.

Rep. Bart Gordon (D., Tenn.), chairman of the committee, said he was concerned about the United States being "held hostage" when it came to access to raw materials for new technology.

Molycorp, Inc., the owner of a mine in Mountain Pass, Calif., that holds the largest, richest rare-earth deposit outside China, is currently looking to restart and expand production. Jim Sims, a spokesman for Molycorp, said the company was planning by mid-2012 to create a complete U.S.-based supply chain for some kinds of rare-earth magnets.

An independent survey of Chinese-language media for The Sunday Times has found army and navy officers predicting a military showdown and political leaders calling for China to sell more arms to America’s foes. The trigger for their fury was Obama’s decision to sell $6.4 billion (£4 billion) worth of weapons to Taiwan, the thriving democratic island that has ruled itself since 1949.

“We should retaliate with an eye for an eye and sell arms to Iran, North Korea, Syria, Cuba and Venezuela,” declared Liu Menxiong, a member of the Chinese people’s political consultative conference.

He added: “We have nothing to be afraid of. The North Koreans have stood up to America and has anything happened to them? No. Iran stands up to America and does disaster befall it? No.”

Officially, China has reacted by threatening sanctions against American companies selling arms to Taiwan and cancelling military visits.

But Chinese analysts think the leadership, riding a wave of patriotism as the year of the tiger dawns, may go further.

“This time China must punish the US,” said Major-General Yang Yi, a naval officer. “We must make them hurt.” A major-general in the People’s Liberation Army (PLA), Luo Yuan, told a television audience that more missiles would be deployed against Taiwan. And a PLA strategist, Colonel Meng Xianging, said China would “qualitatively upgrade” its military over the next 10 years to force a showdown “when we’re strong enough for a hand-to-hand fight with the US”.

Chinese indignation was compounded when the White House said Obama would meet the Dalai Lama, the exiled spiritual leader of Tibet, in the next few weeks.

“When someone spits on you, you have to get back,” said Huang Xiangyang, a commentator in the China Daily newspaper, usually seen as a showcase for moderate opinion.

An internal publication at the elite Qinghua University last week predicted the strains would get worse because “core interests” were at risk. It said battles over exports, technology transfer, copyright piracy and the value of China’s currency, the yuan, would be fierce.

As a crescendo of strident nationalistic rhetoric swirls through the Chinese media and blogosphere, American officials seem baffled by what has gone wrong and how fast it has happened.

During Obama’s visit, the US ambassador to China, Jon Huntsman, claimed relations were “really at an all-time high in terms of the bilateral atmosphere ... a cruising altitude that is higher than any other time in recent memory”, according to an official transcript.

The ambassador must have been the only person at his embassy to think so, said a diplomat close to the talks.

“The truth was that the atmosphere was cold and intransigent when the president went to Beijing yet his China team went on pretending that everything was fine,” the diplomat said.

In reality, Chinese officials argued over every item of protocol, rigged a town hall meeting with a pre-selected audience, censored the only interview Obama gave to a Chinese newspaper and forbade the Americans to use their own helicopters to fly him to the Great Wall.

President Hu Jintao refused to give an inch on Obama’s plea to raise the value of the Chinese currency, while his vague promises of co-operation on climate change led the Americans to blunder into a fiasco at the Copenhagen summit three weeks later.

Diplomats say they have been told that there was “frigid” personal chemistry between Obama and the Chinese president, with none of the superficial friendship struck up by previous leaders of the two nations.

Yet after their meeting Obama’s China adviser, Jeff Bader, said: “It’s been highly successful in setting out and accomplishing the objectives we set ourselves.”

Then came Copenhagen, where Obama virtually had to force his way with his bodyguards into a conference room where the urbane Chinese premier, Wen Jiabao, was trying to strike a deal behind his back.

The Americans were also livid at what they saw as deliberate Chinese attempts to humiliate the president by sending lower-level officials to deal with him.

“They thought Obama was weak and they were testing him,” said a European diplomat based in China.

Prediction: China will do a bit of a gut check with us soon (again) just to gauge our response. It may be financial, it may be military. It won't (probably) escalate, but they will bump us.

China slaps anti-dumping duties on US chicken imports

Agence France-PresseFirst Posted 17:01:00 09/26/2010

Old news; this was announced in February.

China responded to the US anti dumping duties.... Tit for tat; that seems to be the norm...

"Since this January, the US has decided to impose anti-dumping duties of as much as 289 and 175 percent respectively on imports of wire decking products and electric blankets, and the nation also announced recently it would launch an anti-dumping and anti-subsidy investigation into imports of drill pipe used for oil wells from China."

Regarding the islands there is a legitimate dispute; it has been going on for years. It's a lot closer to Taiwan than Japan.I'm not sure who is right or wrong. I just don't want the matter to escalate into anything serious affecting America.http://www1.american.edu/TED/ice/DIAOYU.HTM

Regarding using our military support, I truly hope we would not! **That despite our treaty obligations, we would not provide military support to Japan in a conflict with China over the disputed islands.**

Maybe we should rattle the sabers? Send our fleet to encircle the island? I'm sure the average American would support millions/billions of dollars lost, possible lives lost, at minimum an economic war, just to "defend" a disputed island on behalf of Japan but claimed by Japan, China, and Taiwan.

That being said, while most people fear Islam and the camel riders, I don't lose any sleep. Not to denigrate the threat; it is very real, but I believe one dayChina will pose a much greater and direct threat to America on multiple levels. I'm old enough to remember hiding under my desk for fear of the Russian attack. I hope that will not happen again with China.

**That despite our treaty obligations, we would not provide military support to Japan in a conflict with China over the disputed islands.**

Maybe we should rattle the sabers? Send our fleet to encircle the island? I'm sure the average American would support millions/billions of dollars lost, possible lives lost, at minimum an economic war, just to "defend" a disputed island on behalf of Japan but claimed by Japan, China, and Taiwan.

China sees Obama as weak, and thus the US as weak. Should we continue to allow this perception? That stability in asia post-WWII has been based on American power in the pacific. Japan's de-militarization is based on our promise of them being under our defense umbrella. Do you think Japan rebuilding it's military will be better or worse for asia, the rest of the world and us, or not? If Japan finds it's on it's own, what of Taiwan? What of the rest of the asia-pacific nations? What of America's allies globally? What's the message? America will defend it's allies unless it gets expensive or there is the possibility of casualties. Right?

I understand your point, but I do think we need to pick our fights. IF Japan (mainland)was threatened I think we should offer unlimited support; whatever it takes. Money or lives.

A disputed island off the coast of Taiwan claimed by China and Taiwan does not qualify. Nor would a similar territorial dispute/example for any of our allies justify American lives.

As for Japan rebuilding it's military, I don't know. An interesting question. However, in my opinion, if I was Japan I would reconsider their Constitution and I would begin rebuilding their military. Will that be better or worse for Asia? Us? Again, I don't know. But as you have indirectly pointed out, if your big brother leaves home or seems busy, you better learnto defend yourself from the local bullies. Or one day you might get hurt.

The Japanese Self-Defense Force has quietly upgraded and improved it's military capacity for decades, but this has not spooked the other asian nations as US dominance and article 9 of the Japanese constitution remain in effect. A Japan that turns away from it's pacifist facade would send shockwaves through the region and actually empower Beijing's aggressiveness.

Southeast Asian states, including the Philippines, have become worried by China's increasingly aggressive stance on the complex set of disputes in the South China Sea.

"We expect them to be responsible on what they do as we are. And I believe if we act in that way, there should be no issues," Captain Rudy Lupton, commander of the USS Blue Ridge, the command and control ship of the U.S. Navy's 7th Fleet based in Japan.

Last week, Chinese naval forces carried out drills in the disputed southern waters amid tension with Washington over security in the Korean peninsula and South China Sea.

Last year, there was a collision between sonar equipment being towed by a U.S. Navy warship and a Chinese submarine near Philippine waters.

**snip**

China's growing might military might and rising defense spending have set alarm bells ringing around the region, particularly in Japan and Taiwan. It has repeatedly said its claims on the southern waters and island are indisputable.

The Japanese Self-Defense Force has quietly upgraded and improved it's military capacity for decades, but this has not spooked the other asian nations as US dominance and article 9 of the Japanese constitution remain in effect. A Japan that turns away from it's pacifist facade would send shockwaves through the region and actually empower Beijing's aggressiveness.

Yes, but so too is China upgrading and improving their military capacity as you have previously pointed out. With offensive weapons. I think this is what is spooking the other asian nations. Not so much the possibility of Japan rearming.

As pointed out by various posters, China suffers from serious internal issues that threaten the power structure in Beijing. The chinese people do not believe in communism, they've seen it's failure firsthand. The communist party, in fact does not believe in communism either (Too bad our president and his cabinet do, but that's another thread). Slogans about a "worker's paradise" get nothing but scorn from the chinese masses. Beijing now uses the tragic chinese history of suffering at the hands of other nations to fuel a sense of grievance and nationalism. Japan, in paticular is a focus of this, especially given the real horrors inflicted on China by Japan not very long ago. Of course, the masses of dead chinese as the result of Mao have been sent to the memory hole.

Beijing is forced to run as fast as it can just to stay in place providing a degree of improved standard of living and economic mobility to a still growing population. A Japan that distances it's self from the US and re-militarizes would be very beneficial for Beijing in empowering it's hawks and refocusing domestic discontent on the still very hated japanese.

Every time Beijing toes over the line and feels like it won, the more it builds to taking the next step until we end up in a real confrontation.

You put out fires when they are small, you don't sit back and wait until the fire has gotten out of control because a small fire isn't worth the time and energy.

Japan's top cabinet spokesman has confirmed the presence of 2 Chinese fisheries patrol boats in waters near the Senkaku Islands since last Friday. He says Japan is demanding that the Chinese vessels leave the area.

BEIJING--The Chinese government has decided to regularly deploy its fisheries patrol boats near the Senkaku Islands in an apparent reaction to the arrest of a Chinese fishing boat captain near the Japanese islets early this month, it was learned Monday.

It was anticipated that the administration of President Hu Jintao would intensify such patrols as a retaliatory measure against the arrest and detention of the captain.

The Chinese Agriculture Ministry said in a Sept. 20 publication for the fisheries industry that the government hereafter would need to increase and make permanent the activities of its patrol boats near the islands in the East China Sea, Hong Kong's Ming Pao Daily News reported Monday. The official in charge emphasized in the ministry's fisheries news that the action was designed to protect the safety of the country's fishermen and their assets.

According to sources, fisheries patrol ships No. 201 and No. 204 are currently in operation around the Senkaku Islands, territorial rights over which are claimed by both China and Taiwan.

The Agriculture Ministry operates the fisheries patrol ships, some of which are decommissioned navy ships. Two patrol ships began regular patrols in the South China Sea in April "to protect" the country's fishing boats and control the "illegal operation" of foreign fishing vessels.

Meanwhile in Tokyo, the Japanese government has decided to demand that the Chinese government pay for the damage caused to two Japan Coast Guard vessels by the Chinese fishing boat, Chief Cabinet Secretary Yoshito Sengoku said Monday.

"This is an important issue for the government, separate from the issue over whether such a demand is made shortly or sometime after the two countries' relations 'have cooled down,'" the top government spokesman said.

He thus did not make it clear when Japan will make such a demand.

The collisions, which took place on Sept. 7 in the Japanese territorial waters, have led to one of the worst diplomatic rows in years between Japan and China. There are no signs of an easing of tensions, despite the release of the captain in what was effectively a concession by Japanese authorities.

After the arrest of the captain, China intensified pressure on Japan, through such means as restricting exports of rare earth minerals and suspending ministerial-level talks.

In New York last week, Chinese Premier Wen Jiabao said, "If Japan clings to its mistake, China will take 'further action' and the Japanese side shall bear all the consequences that arise."(Sep. 28, 2010)

BEIJING — China has stepped up customs inspections of goods shipped to and from Japan, slowing trade, logistics companies said Monday, amid a spat over the detention of a Chinese fishing boat captain near disputed islands.

Customs officers who usually look at 2 percent to 10 percent of goods in shipments began checking up to 95 percent this weekend, said employees of cargo companies in Shanghai and Shenzhen, a major port near Hong Kong. Customs officials gave no explanation for the change, they said.

"Normally it takes one or two days but now it's going to be about a week," said Mary Deng, an administrator for Shenzhen Hyun Young International Transportation Co. The company handles shipments of Chinese-made furniture, clothing and other goods to Japan.

A customs agency spokesman denied that goods to and from Japan were targeted for increased inspections.

"China's customs agency monitors and inspects inbound and outbound products according to law," said the spokesman, who would give only his surname, Tao. "We have not increased the rate of inspections on Japan-related products."**If you know China, you know this is their classic "fcuk you", done while shrugging their shoulders and smiling apologetically.**

Anti-Japan protesters hold war flags of the Japanese Imperial Army with "Japan get out" written on them during a demonstration near the Japanese Consulate in Hong Kong Sunday, Sept. 26, 2010. China has reiterated its demand for an apology from Japan over the detention of a Chinese fishing boat captain whose arrest plunged relations between the Asian neighbors to their lowest level in years.

**Cue the astroturfed protesters.**

Anti-Japan protesters hold war flags of the Japanese Imperial Army with "Japan get out" written on them during a demonstration near the Japanese Consulate in Hong Kong Sunday, Sept. 26, 2010. China has reiterated its demand for an apology from Japan over the detention of a Chinese fishing boat captain whose arrest plunged relations between the Asian neighbors to their lowest level in years.

China’s recent diplomatic victory over Japan makes Korean bureaucrats and corporations sweat since the former’s lethal weapon of rare metals against the latter is expected to work on Korea as efficiently as on Japan.

Late last week Tokyo released the detained captain of a Chinese fishing trawler, who was detained by the Japanese coast guard early this month while operating in the waters around a group of uninhabited rocky outcroppings in the East China Sea.

Although Japan has shown a very stern attitude on issues involving disputed territory, the country easily surrendered this time around as China reportedly halted shipment of rare earth elements although Beijing denies such maneuver.

“What if China adopts the strategy of stopping shipment of the materials to Korea amid bilateral political or economic disputes? We would be at a loss on how to deal with it,” said a Seoul analyst who asked not to be named.

Rare-earth elements refer to a collection of 17 chemical elements in the periodic table. They are indispensable in producing high-tech products or eco-friendly technologies such as electric cars, wind turbines and liquid crystal displays (LCDs).

Korea, home to the world’s top LCD manufacturers, does not produce them at all and depends wholly on imports to procure them. Last year, all of its 2,600 tons of demand were met by shipments from China.

The state-run Korea Resources Corporation (KRC) has set up a target of maintaining its reserves for the rare-earth metals at more than 1,150 tons by 2016 but its present storage remains at a mere 3 tons.

In this climate, Korea seems to have no choice but to rely on China, around 95 percent of which produces all supplies. The communist state even imposed a global export quota on them.

Industry watchers point out that Asia’s fourth-largest economy needs to generate a long-term plan of grappling with the aforementioned problems.

“Many Koreans tend to presume that they would need us just as much as we need them. However, the reality check shows a different result as amply demonstrated by the past disputes,” the analyst said.

“Have a look at the garlic case a decade ago. We were already not in the position to commission a tit-for-tat strategy against China and now there are the rare-earth elements. We need to do something to level the playing field but the hitch is that nobody seemingly knows how to do so.”

Midway through 2000, the former Kim Dae-jung administration jacked up tariffs on Chinese garlic from 30 percent to as high as 315 percent by 2003 in order to protect Korean farmers from cheap Chinese imports.

A week later, the Chinese government countered the move by banning imports of Korean handsets. Seoul immediately backed off by cutting the tariffs after quick negotiations.

Korea’s dependency on China has shot up since then as the latter became the No. 1 trading partner of the former during the first decade of the new millennium, nudging past the United States.

I'm still not sure we should rattle the sabers if only economic tit for tats is the results. Or even enter into the fray.Japan and China are both big boys.

However, IF China threatens military action against Japan then America should make it very clear that we willbe there to defend Japan whatever it takes. At this time, I cannot see it going anywhere close to that far.

Stayed tuned. I doubt if this game is over. Each country has it's own rabid nationalists to deal with. And it's own business interests.

Prime Minister Naoto Kan's administration believed that releasing the Chinese fishing boat captain would end this country's confrontation with China, but that expectation proved to be wrong as Beijing instead escalated its hostile actions.

The Chinese government has demanded an apology and compensation for the arrest of the captain, whose boat collided Sept. 7 with Japan Coast Guard patrol vessels in Japanese territorial waters off the Senkaku Islands in Okinawa Prefecture.

After the Japanese government refused the demands, the Chinese government immediately released a counterstatement. The tense back-and-forth between Japan and China continues.

Internal Affairs and Communications Minister Yoshihiro Katayama said Saturday, "The Japanese side responded a little more maturely [than China]."

Katayama praised the decision to release the captain, who was arrested on suspicion of obstruction of the JCG's official duties. "It's not good for [Japan and China] to be locked in a dispute," he said.

However, the Japanese government was deeply shocked by China's unexpected demand for an apology and compensation.

"The Senkaku Islands are part of Japan's territory," a government source said. "What do they mean demanding an apology even though the arrest was in line with Japanese law?"

His remark reflects the optimistic view that spread through the Prime Minister's Office on Friday, when it was decided to release the Chinese captain. Officials thought the release would immediately lead to an improvement in Japan-China relations.

Government officials have voiced serious concern about future developments. One said, "After winning the release of the captain, China may try to further shake Japan, instead of stopping its attacks."

Intrusions by Chinese fishing boats into Japan's territorial waters around the Senkaku Islands are expected to escalate. JCG officials and other involved parties are concerned they will be unable to effectively patrol the area even if Chinese boats fish there illegally.

There is no sign China will stop its apparent retaliation over the arrest of the captain. For example, China has made moves indicating it will unilaterally drill in natural gas fields in the East China Sea.In the gas field Japan calls Shirakaba and China calls Chunxiao, the Japanese government recently confirmed that what appeared to be an excavating drill was brought to the Chinese facility and turbid water was newly spotted around the gas field.

At a meeting Friday of the Liberal Democratic Party's Foreign Affairs Division, a senior official from the Natural Resources and Energy Agency said, "We continue to believe that drilling has likely been conducted."

The Foreign Ministry also China likely has begun drilling and has repeatedly asked China through diplomatic channels whether it is true.

In addition, four Fujita Corp. employees who were detained by Chinese authorities in Hebei Province have not yet been released, although officials of the Japanese Embassy in Beijing finally were allowed to meet with them Saturday.

Officials in the government and the Democratic Party of Japan are concerned about China's next steps.

"Now that we've given up the captain, who was our bargaining chip, we're afraid China will do anything it wants toward Japan," a source close to the DPJ said.

Kan said in New York on Friday: "Japan and China are important neighbors who have responsibilities in the international community. Both sides need to make cool-headed efforts to deepen their strategic bilateral relations."

China’s claim to the “Diaoyu” islands is older – going back to the fifteenth century – and more urgent. China’s economy and hell-for-leather military buildup makes it the fastest-growing consumer of carbon-based fuels. Forget all the talk of China’s “green” economy: they are (at least) the world’s third-largest oil consumer, have for at least three years been opening coal-fueled power plants at the rate of about one every week, and one of the Chinese government’s principal goals is to expand their claims to oil and gas resources. China was forced to shut down about 3% of their coal plants this year due to a coal shortage. Energy demand continues to rise, unabated by environmental concerns.

China’s claim to the Senkaku/Diaoyu islands is serious, and not subject to compromise. It is but one of several energy-based issues which could – and likely will – drive China to war.

My 2006 book, “Showdown: Why China Wants War with the US” was unfortunately titled. It should have been, “Why China Needs War with the US.” China must confront us in order to remove our protective barrier to its hegemony over its region.

China wants to avoid compromise because its aim in what it refers to as the “peripheral nations” is to assert hegemony: peacefully if possible, and through military confrontation if necessary. With nations such as India, they can only bluff and bluster. With Japan and others, they can literally gain ground through intimidation if the U.S. remains supine.

China’s dispute with Japan meets two needs. If it can assert hegemony over the Senkakus, China can both expand its influence (and intimidate other regional nations) while gaining possession of badly-needed natural gas reserves. (The Senkakus, according to a report by GlobalSecurity.org may have gas reserves sized at 1.6 trillion cubic feet and are expected to be a major source of production within ten years.)

Monday, Sep 27, 2010, Page 8President Ma Ying-jeou (馬英九) was no doubt pleased last week when Chinese Premier Wen Jiabao (溫家寶) offered his reassurances concerning the missiles China has aimed at Taiwan. Ma has repeatedly called on Beijing to remove the missiles if the two sides of the Taiwan Strait are to begin political negotiations.

However, a closer look at Wen’s remarks indicate little to be pleased about. It was not a policy statement, but merely an indifferent response to questions from a Taiwanese reporter.

As Democratic Progressive Party (DPP) Chairperson Tsai Ing-wen (蔡英文) said, “will one day be removed” was so vague that it is meaningless.

Not that being more specific would have helped. Had Wen provided a date and timetable, removing the weapons would still be little more than a gesture. Analysts repeatedly point out that if the missiles are moved, they can easily be replaced if negotiations do not produce the desired results. And if China gets what it wants: It can deploy the missiles elsewhere, which makes Taiwan’s problem everyone’s problem since China has no shortage of territorial disputes.

Indeed, an incident last week reminds us of just this. Japan’s unsuccessful attempt to prosecute a Chinese fishing boat captain for colliding with two Japanese Coast Guard vessels in disputed waters off the Diaoyutai Islands (釣魚台) is disturbing for many reasons.

First is Tokyo’s sheer ineptitude in the affair. Having detained the captain and announced plans to try him, officials abruptly reversed course when an enraged China threatened to block exports to Japan of materials essential to high-tech manufacturing. Apparently surprised by the fury of China’s response, Tokyo’s lack of resolve to pursue the case angered many Japanese, who described the decision as foolish and humiliating.

Another reason for alarm is the Chinese response, which, to give the Japanese some credit, was stronger than expected given that such incidents are hardly unusual. For Ma and others who seek to calm concerns about future relations across the Taiwan Strait, China’s treatment of Japan signals not just its growing power, but its aggression. For all the talk of soft power and denials of regional hegemony, China seems willing to use force to achieve its goals.

Most troubling about Japan’s humiliation, however, is that the force China used was not military. For those determined to see Taiwan obtain F-16s and other US military hardware for cross-strait defense, it is worth noting that Japan has plenty of military equipment, and thousands of US troops to operate it.

Another thing analysts have long said is that China’s military threat will ultimately be matched by its economic clout. As Japan’s largest trading partner, China wields immense power over its neighbors. Neither missiles nor any other form of conventional armament could begin to match the damage that could be caused to Japan’s already struggling economy were China to follow through on its threat.

The obvious effect in Taiwan of Japan’s Diaoyutais debacle will be to dampen enthusiasm for the Economic Cooperation Framework Agreement, which the Chinese Nationalist Party (KMT) administration has pushed so strongly. Closer cross-strait economic ties will certainly make Taiwan more vulnerable to Chinese coercion, and warnings of this danger must be harder for the government to dismiss.

Yet the ultimate lesson may be for the DPP. Say what she wants about Wen’s remark, but Tsai too must be wary. China is increasingly the dominant force in the region and it must be dealt with. High seas bravura will not do. If the DPP is to be a viable political alternative, it must develop positions that will make a cross-strait relationship possible.

HONG KONG — Days after it flexed its economic muscle in a diplomatic dispute with Japan, China continued to display a more assertive international economic policy on Sunday as it imposed steep tariffs on poultry imports from the United States.

China’s commerce ministry announced on its Web site that it would impose import tariffs on American poultry of up to 105.4 percent. It said the tariffs reflected the result of its own antidumping investigation, which looked at whether the United States was harming China’s poultry industry by exporting chicken parts for less than it cost to produce them.

The commerce ministry started the investigation less than two days after President Obama imposed steep tariffs on Chinese tires a year ago. Chinese officials have denied that the inquiry was in retaliation, but poultry is one of the few categories in which the United States runs a trade surplus with China, making it an ideal target for Chinese trade actions.

The tariffs are another example of China’s willingness to use its economic leverage when it feels it is being challenged. An official at one of Japan’s top traders in rare earth minerals said on Monday that there appeared to be no resumption in shipments to Japan, a result of a still-simmering dispute over Japan’s arrest of a Chinese fishing boat captain. The official, who spoke on condition of anonymity, said traders were watching closely to see whether Chinese customs would start letting shipments through again. “China’s rising assertiveness on the international economic stage reflects its growing economic might and the self-confidence of its leadership, but is tempered by the realization that it faces many challenges in terms of its own development,” said Eswar S. Prasad, an economics professor at Cornell.

Carol J. Guthrie, a spokeswoman for the United States trade representative, said, “We are disappointed that duties are to be imposed and will be examining the determination for consistency with applicable rules.”

Quarrels over products as diverse as chickens and rare earth minerals might seem like minor spats. But they come against the backdrop of China’s vigorous defense of its currency policy, and its stepped-up activity in the World Trade Organization.

As I said before, we can't afford a trade war. I would send the 7th fleet to escort Japanese Coast Guard ships as they resume their patrols of their territorial waters. This would rock Beijing and the Sinohawks/PLA elements out of favor just as China's next generation of leadership sorts it's self out.

That can turn this win into a painful defeat for them that will moderate their aggressive behavior.

If this move were to turn this into a shooting war, now is better than later. Later, we will be weaker, later, they will be stronger.

"We can't afford a trade war" yet I bet, at least for this round that is how China will fight. Between trade, dollars and bonds held by China it won't be pleasant for America. The word ugly comes to mind. Of course they will respond. And then what do we do? Send black ships into Hong Kong?

For the moment it seems more prudent to let Japan and China resolve their differences between themselves.

You did note that the other asian nations are watching this closely and don't seem real happy with how things are looking, right? Without us, what exactly will Japan do?

Send black ships into Hong Kong?

No, as I said before, we move the 7th fleet, which just happens to be patrolling the western pacific right now, to escort the Japanese Coast Guard as it patrols it's legally recognized territory. Then we see what moves China does or does not make.

There is NEVER a power vacuum in human affairs. There are those on top, those on the bottom and those in motion in either direction.

In this case, China sees a weakened America with a weak, inexperienced leader who at the worst will send letters harshly condemning China's actions. Sadly, their perceptions are spot on. There is an old chinese saying that says "Kill the chicken to scare the monkey". Make a public display of your power, make an example of a chosen victim to get others to recognize that they could be next. Japan is the chicken today, and the rest of asia, us and the rest of the world are to get the message of who is dominant in eastern asia these days.

Those who neglect history are doomed to repeat it.

As Crafty already pointed out, remember another country with a chip on it's should for past grievances, a wave of nationalist fever in it's population and a growing military looking to expand it's territory? Remember those who thought appeasement would bring them "peace in our time"?

September 28, 2010China blames US for dispute with JapanWilliam R. HawkinsThough the Chinese fishing boat captain detained by Japan after ramming two coast guard boats returned home over the weekend, tensions remain high between Beijing and Tokyo. The underlying dispute over the islands called Diaoyu by China and Senkaku by Japan continues. Both countries claim ownership from ancient times, but Japan has made the stronger enforcement effort. China claims it will step up its patrols around the islands, so future clashes are likely. The islands are 240 nautical miles southwest of Okinawa. At stake is control of the surrounding East China Sea, its oil and mineral resources and trade routes.

The day after the Chinese captain was released, the Chinese Communist Party newspaper Global Times editorialized that "Coolness Towards Japan Should Remain." It stated

Japan needs to be given a clear message that irresponsible policies have consequences. The Japanese public also needs to be clear that China should not be trifled with. China's 1.3 billion people have no intention of overwhelming the Japanese public in sentiment, but 100 million Japanese certainly should not try to overwhelm the Chinese people.

A Global Times "editor's choice" commentary by two Chinese scholars September 27 blamed the United States for the crisis because Washington gave a weak Tokyo the courage to confront Beijing. Liu Jiangyong, deputy director of the Institute of International Studies at Tsinghua University, wrote,

The incident cannot be seen as an isolated dispute between Japan and China. The American shadow is obvious. It is the US military support that drives the hard-line stand of Japan against China.

Even though the US transferred control [of the islands] to Japan [after World War II] , that doesn't mean the islands are the Japanese territory. So there is no legal foundation to support the [US-Japan Security] treaty's application to the Diaoyu Islands. It is the US that has made the Diaoyu disputes more complicated and caused it to become an obstacle to a healthy Sino-Japanese relationship

Ni Lexiong, a professor at the Shanghai University of Political Science and Law, went further in his argument,

The background to the incident is that the US has been provoking China and taking advantage of conflicts between China and its neighbors to contain China recently.

The Diaoyu Islands incident could be seen as a direct result of the recent series of Sino-US confrontations, from US-South Korea joint military drills to the US challenging China's core interests in South China Sea. Facing these provocations, China has to respond in defence, which inspires surrounding countries such as Vietnam, India and Japan to challenge China

Logically Japan should intensify political and military cooperation with China; unfortunately, it turns to the US politically and militarily.

Direct talks between President Barack Obama and Chinese Premier Wen Jaibao at the United Nations last week fell flat. China seems confident that it can bully both the U.S. and Japan. Washington needs to demonstrate to Beijing very quickly that the balance of power has not shifted away from the democratic alliance in Asia if future confrontations are to be deterred.

GM is correct; in 1971 as part of Okinawa we returned the islands to Japan. However a little history is important. There are two sides to this story.

In 1874, Japan took Liu Chiu Islands (Okinawa) from China by force when Chinese Ching Dynasty was involved in several wars with other foreign countries. However, the Diaoyu Islands still remained under the administration of Taiwan, a part of China. After being defeated by Japan in the Sino-Japan War, China ceded Taiwan to Japan under the Shimonoseki Treaty. As a part of Taiwan, the Diaoyutai Islands belonged to Japan at that time.

Taiwan was returned to China at the end of World War II in 1945 based upon the 1943 agreement of the Cairo and Potsdam Declarations. The Japanese government accepted the terms that stated in these documents"...that all the territories Japan has stolen from the Chinese, such as Manchuria, Formosa, the Pescadores, shall be restored to the Republic of China.

In 1951 Article 2 of the Treaty of Peace with Japan signed by Japan and the Allied Powers (excluding both the ROC and the PRC) stated that, "Japan renounces all right, title and claim to Formosa and the Paracels". Article Four of the separate peace treaty signed between Japan and the ROC in 1952 declared that all agreements between Japan and China before 1941 were null and void. [2] As stated above, it is reasonable to take the mean that Diaoyu Islands should be returned to China because the Diaoyu Islands are one part of Taiwan. However, Japanese have maintained that the islands should not be included in these treaties. This issue remain quiet through the 1950s and 1960s probably because the these small uninhabited islands held little interests for the three countries.